China Galaxy Securities Co., Ltd. released a research report stating that it continues to emphasize focusing on offensive and defensive layout opportunities in the pig breeding industry. Based on considerations of breeding sow efficiency and farming efficiency, pig prices in 2025 may show a year-on-year downward trend. Comprehensively considering policy-driven capacity reduction and industry loss-driven capacity reduction, combined with cost declines bringing better-than-expected profits for excellent pig enterprises, the firm focuses on high-quality pig enterprises with significant marginal cost changes and good capital conditions. The pet food industry is in a growth phase, with market share of quality enterprises showing an upward trend. The firm suggests paying attention to the post-cycle of the breeding chain and recommends feed leaders and animal vaccine-related enterprises. Yellow chicken prices have some correlation with pig prices, and considering the low supply side, there is potential for price increases ahead.

Main views from China Galaxy Securities Co., Ltd. are as follows:

August CPI declined year-on-year, agricultural product trade deficit slightly decreased year-on-year

China's August CPI was -0.4% year-on-year, with food items at -4.3% year-on-year (pork -16.1% year-on-year); CPI remained flat month-on-month, with food items +0.5% month-on-month (pork -0.5% month-on-month). China's agricultural product imports in August totaled $18.748 billion, down 3.13% year-on-year, exports were $8.102 billion, up 3.9% year-on-year, with a trade deficit of $10.647 billion, down 2.54% year-on-year.

September agricultural index performance weaker than CSI 300

From early September to the 26th, the Agriculture, Forestry, Animal Husbandry and Fishery Index fell 1.36%, while the CSI 300 rose 1.19% during the same period. Among sub-sectors, feed (+0.86%) had relatively leading gains, while agricultural product processing (-5.11%) and animal health (-3.78%) performed relatively poorly.

August breeding sow inventory decreased 0.1% month-on-month, September pig prices hit new lows

Pig prices rebounded from the low of 24.1.17, reaching an annual high of 21.06 yuan/kg in mid-August, then fluctuated downward; by September 17, 2025, pig prices were 13.71 yuan/kg, down 16% from the end of 2024. On September 26, self-breeding and purchased piglet farming profits were -74 yuan/head and -237 yuan/head respectively; overall industry losses may drive capacity reduction. At the end of August, China's breeding sow inventory was 40.38 million head, down 0.1% month-on-month.

Regarding 2025 pig price trends, the firm believes annual average prices will decline year-on-year, with the difference being that excellent pig enterprises continue to optimize total costs, bringing better-than-expected breeding profits. Additionally, since 2025, changes in pig enterprise capacity rhythm, industry secondary breeding conditions, slaughter weight and other aspects may be affected and bring unexpected changes, worthy of key attention.

August pet food export volume grew slightly, price declines dragged down total value

China's pet food exports in August were 834 million yuan, down 15.5% year-on-year. Export volume was 29,500 tons, up 3.53% year-on-year; average export price was 28.31 yuan/kg, down 18.38% year-on-year. Cumulative exports from January to August 2025 were 6.764 billion yuan, down 2.35% year-on-year. Breaking down volume and price, export volume was 230,400 tons, up 6.23% year-on-year; average export price was 29.35 yuan/kg, down 8.08% year-on-year.

Risk warnings include risks of livestock and poultry prices not meeting expectations, animal disease risks, raw material price volatility risks, policy risks, natural disaster risks, etc.